You are here

Press Response - November 16, 2003

FINANCE: Groups Fear Canadian Funding for Romanian Mine

Stephen Leahy

BROOKLIN, Canada, Nov 16 (IPS) - The World Bank's refusal to help fund a Canadian company's controversial development of a huge open pit gold mine in Romania has raised concerns the Canadian government will step in with money.

Last Monday hundreds of people gathered outside Canadian embassies in major European cities, including Budapest, Amsterdam, Vienna, Bratislava and Prague, to protest the 400-million-U.S.-dollar Rosia Montana gold mine in Romania. · Export Development Corporation· Romanian NGO Alburnus Maior· Gabriel Resources

''The Canadian government has to act to stop this mine. It will destroy the homes, churches and livelihoods of my people,” said Sorana Ciura, a member of Alburnus Maior, the Romanian group spearheading the protests, speaking at a news conference in Ottawa..

The project would destroy the country's oldest village, 10 churches, cemeteries, historical sites and archaeological treasures and displace 2,000 people while producing 196 millions tonnes of cyanide-laced waste, according to a statement from the group.

One year ago environmentalists thought they had stopped the project when World Bank President James Wolfensohn personally intervened to halt a 100-million-dollar bank loan.

Since then, Gabriel, which owns 80 percent of the project, has managed to secure 34.5 million dollars from a consortium of Canadian banks and brokers, and is looking to add to that amount.

"Rosia Montana is the kind of project that Canada's Export Development Corporation (EDC) could get involved in", said Fraser Reilly-King of the Halifax Initiative, a coalition of Canadian NGOs that monitors international financial institutions (IFIs).

"The EDC, a government-funded, semi-autonomous agency, could provide loan guarantees, risk insurance or other financial assistance to Gabriel Resources for what would be Europe's largest open-pit gold mine", Reilly-King said in an interview.

The project faces widespread public opposition, including from the Romanian Orthodox Church. ”The implementation of the project alone, will provoke a human, ecological, economic and cultural disaster,” a church official said in a statement Nov. 12.

But Romanian government support is strong and the project, which includes the acquisition of least 30 percent of homes in the area, is proceeding.

"Corruption is a concern", said Reilly-King, especially given the complex land ownership issues that arose from collectivisation under communist rule. Few people have free and clear land titles.

”But it's very difficult to investigate corruption,” he added.

The EDC says firmly that it is not now involved in the project.

”Should Gabriel come to us, we would investigate the financial situation and conduct an environmental review,” said EDC spokesperson Rod Giles.

"The EDC also has a strict anti-corruption policy", Giles told IPS in an interview Friday. "Its due diligence process involves looking into any past history of corruption and a company's current practices."

”We would not do business with any company until we are satisfied,” Giles added.

Reilly-King takes little comfort from those assurances.

”Despite its policies, the EDC is very flexible and doesn't disclose much information about what projects they're funding.”

"The agency could even be financing the Rosia Montana project with public money but Canadian citizens would never know", he added.

"Such lack of transparency creates an environment where corruption can flourish", said Patricia Adams, executive director of Toronto-based Probe International, a non-governmental organisation (NGO) that investigates mega-projects around the world.

"Funding agencies similar to EDC in the United States and Australia give full public disclosure of the projects they finance with public money", Adams told IPS.

"EDC is not particularly tough on corruption either", she said. "It continues to do business with engineering giant Acres International, a Canadian company found guilty of bribing officials in the African country of Lesotho to secure a World Bank contract in a 12-billion-dollar mega project".

After exhausting all appeals, Acres was fined 2.8 million dollars by the Lesotho courts last August.

"That is a trivial amount for Acres", said Adams. "The real penalty ought to be the loss of future business opportunities with the World Bank and EDC", she added.

Under World Bank rules, companies found guilty of corruption on bank projects should be barred from receiving future contracts. But the bank says it is conducting its own investigation of Acres before it makes a decision.

”I don't know why the World Bank needs more information after the trial,” said Adams.

"Lesotho was exemplary in following the rules of law on international corruption, which is what countries and agencies of the North have been telling governments in the South to do for years", she added.

"The EDC looked into the Acres situation and is satisfied with the firm's new anti-corruption procedures", said Giles.

When asked how the EDC would police Acres' compliance, Giles admitted it could not monitor the company's activities.

Adams added that Acres and a number of European companies involved in the Lesotho scandal very nearly did not get caught.

”It's extremely difficult to uncover corruption and that's why those caught should be punished severely so others will not run the risk,” she said.

But Giles said, ”it's not the role of financial institutions to punish companies for these things”.

"Nor can you dismiss Acres continued insistence that it was not involved in bribing officials in Lesotho", he added. ”Had the case been heard in an Ottawa courtroom, there might have been a different outcome.” (END/2003)